(Table: Prices and Demand) Look at the table Prices and Demand.The New Orleans Saints have a monopoly on Saints logo baseball hats.The Saints sell at most one hat to each customer, and the table shows each customer's willingness to pay.The marginal cost of producing a hat is $18.How much is the Saints' profit at the profit-maximizing output?
A)$24
B)$18
C)$12
D)$30

Question

Quizplus · Accepted Answer

To maximize profit, the Saints should produce hats until the marginal revenue (MR) equals marginal cost (MC). In this case, the MR can be determined by looking at the demand column and seeing how much revenue each hat sold will generate. For example, if the Saints sell one hat, they will generate $30 in revenue. If they sell two hats, they will generate $50 in revenue. Therefore, the MR for the first hat is $30, and for the second hat, it is $20 ($50 - $30).

Using this information, we can create a table to determine the optimal output and profit:

Output | Price | Revenue | MR   | MC  | Profit
1      | $30   | $30     | $30  | $18 | $12
2      | $20   | $40     | $20  | $18 | $22
3      | $15   | $45     | $5   | $18 | $27
4      | $10   | $40     | -$5 | $18 | $22

As we can see, the profit is maximized at an output of 1 hat, where the profit is $12. Therefore, the answer is B) $18.

(Table: Prices and Demand) Look at the Table Prices and Demand.The